Barrett's R-Rated Budget

The ink on the state’s biennial budget is barely dry and we’re already talking about the 2010 budgets for the county and city. Milwaukee County Executive Scott Walker had his department heads deliver their shocking news without much of a heads up (or participation by the public or the county supervisors) but Milwaukee Mayor Tom Barrett decided to confront the grim news heads on, in public, at the Milwaukee County War Memorial yesterday.

To the surprise of no one, Barrett said “the 2010 budget is the biggest challenge we’ve had in many, many years.”

At one point he joked the budget forecast was “R-rated because it’s not particularly pleasant.”

How unpleasant? If the best-case scenario holds true, the city will have to make series of payments to its pension system: $49 million in 2010, $67 million in 2011, and $80 million in 2012. “That’s if everything goes right,” Barrett said. In the worst-case scenario, those contributions would be increased to $92 million in 2010, $126 million in 2011, and $148 million in 2012.

The city hasn’t had to make a payment to its well-run pension fund in six years, but the economic downturn has changed all that.

Adding to the pain is the flatlined shared revenue from the state; the governor’s veto of a .15% sales tax for law enforcement; an increase in the garbage tipping fee that, for once, includes municipalities; increasing costs of providing health care; and declining property values, which aren’t being offset by new development.

Barrett’s administration has been looking for ways to raise more revenue—such as increasing fees, adding the sales tax, selling more water to other communities—but the bulk of the city’s revenues will still come from the property tax.

That means the mayor is is looking at making cuts of up to $45 million, or 10% of the operating budget. He warned that service levels will change, even though the public will continue to expect high-quality services from the city.

If I were a betting woman, I’d say that the police and fire departments could be a target, since their employees’ pay is higher than the general city employee’s salary; pension costs are higher; and those departments recover very little of their expenses through fees.

For example, the Department of Public Works recovers 50.7% of its operating costs through fees (garbage, snow and ice removal, etc.). But the MPD recovers 0.7% of its costs through fees and the MFD recovers 6.8% of its operating budget. This may be comparing apples and oranges, but I’d be surprised if these departments weren’t forced to find new ways to raise revenue or cut costs. What’s more, those departments make up half of the city’s operating budget: the MPD comprises 39% of the tax levy-funded operating budget, and MFD takes up 18% of it. (DPW makes up 19% of the operating budget.)

So it’s no wonder why Barrett made a pitch to fund law enforcement through a sales tax, which would be paid, in part, by non-Milwaukee shoppers. He can try to chip away at the library, the health department, and neighborhood services, but they’re so small that it wouldn’t make much of an impact on the city’s coffers.

The news wasn't all horrible, though. The MFD is reducing overtime costs by implementing a flexible sick-day policy. The Milwaukee Public Library system is moving toward more automation and is planning on installing a green roof on its stellar central library building. City Health Commissioner Bevan Baker explained that the expansion of BadgerCare Plus, which now covers childless adults, will allow the city to recoup the costs it incurs when providing care for these folks. Baker also said he hopes to increase testing at the city’s lab, which will increase revenue. And Environmental Services Superintendent Preston Cole got a few laughs when providing an overview of the “sexy” DPW programs that are saving the city money. Yes, you heard it here: cleaning up trash and trees in an economically sensible way can be a turn on. Now that sounds like a much better way to create an R-rated budget.

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